Home / Business / Asos shares plummet by 40% as European retail chill issues fail online

Asos shares plummet by 40% as European retail chill issues fail online

British online fashion retailer shares fell 40% on Monday after warning that weak sales in the crucial month of November would hurt its 2018 annual profit.

"The current environment of economic uncertainty in many of our large companies" Markets, coupled with a decline in consumer confidence, have led to the weakest growth in online apparel in recent years, "a statement said.

Asos ( ASOMY) was one of the few highlights for retailers in the UK, where many sellers were struggling with the shift to online shopping and economic slowdown due to uncertainty over Brexit.

Asos' profit warning more than Wiping $ 1 billion off their market value shows that even savvy online retailers would find it hard to break this Christmas season.

"This is a potential warning sign for online retailers, which has been relatively good compared to traditional companies have held [Main Street] chains, "said David Cheetham, chief market analyst at the online broker XTB, in a message to the customers.

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Asos said on Monday that conditions in key European markets such as Germany and France were "much more difficult". However, it has also been badly hit in the UK, where the Brexit saga has unsettled investors and the public.

According to the National Statistics Office, around 80,000 UK retail jobs have disappeared in the first half of the year. Official data on UK retail sales in November will be released on Thursday.

Asos, which sells hundreds of brands as well as its own fashion lines, said there was a "high level of discount" and advertising from competitors on the Internet to the UK. Consumer confidence in the country is "increasingly fragile".

The retailer said it still outperformed its UK rivals, but only because it offers more discounts than planned.

Michelle Bilson, an analyst at Berenberg Bank, said her dependency on rebates shows "bad conditions in the retail market" and "a weak consumer."

Asos also announced its strategy on Black Friday discounts that are no match for the competition.

CEO Nick Beighton confirmed on Monday in a conference call with analysts that Black Friday's offer was "not strong enough".

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